A method to estimate precise iron loss in an electrical machine is presented. This method implements a 2D finite element simulation of moving structure including the non-linear magnetic behaviour and a new dynamical hysteresis model of the magnetic circuit. The 2D finite element simulation is used to evaluate the induction evolution with time in any point of the motor structure. The time evolution induction signal is then used as the input of the dynamical hysteresis model to estimate the hysteresis cycle and therefore local iron loss. Results on a 4 kW, 4-pole, 3-phase sine fed induction motor show a good agreement between theoretical estimation and measurement. For the first time, it is shown that rotor loss represents 30% of the motor iron loss